Pearl Impact Capital Blog 2019 Proxy Voting Review

At 'Pearl' we vote proxies in the best interest of our clients. As such, we incorporate environmental, social and governance (ESG) factors into proxy elections. We believe that companies with strong ESG characteristics are better equipped to adapt to change, to evolve, and to avoid unnecessary liabilities. In some cases this results in voting against management's recommendations on conflicting issues and proposals.During the 2019 proxy voting year we voted for diverse boards and withheld votes for non-diverse boards. Corporations must have at least one-in-five female representation on its board in order for us to vote in favor of nominees. According to the Alliance for Board Diversity in 2018, women held only 22.5% of Fortune 500 board seats. We intend to do our part to push this percentage higher, as we believe gender diversity is additive to shareholder value.We vote executive compensation proposals on a case-by-case basis. In general we believe executive compensation is too high relative to the average worker. Accelerating executive pay has exacerbated inequality in the United States and abroad. Excessive CEO compensation generates pay increases for other high-level managers, while pay at the middle and bottom of the wage distribution continues to be depressed. Furthermore, increasing CEO pay is not actually linked to an increase in the value of CEOs' work; instead, it more likely to reflects close ties with the corporate board members who set their pay. As such, we have a tendency to vote against executive management compensation changes, especially if that pay is higher than industry peers.Several shareholder proposals were worthy of our vote in 2019, despite management's recommendation to the contrary. For example, we voted 'for' an initiative on sustainable packaging at Starbucks put forth by shareholder advocacy group As You Sow. The proposal asked the company to reinvigorate a previous commitment to serve 25% of beverages in reusable mugs, and to extend plans to recycle cups and other packaging in North American stores and parts of Western Europe to all locations globally. We also voted 'against' cumulative voting elimination at Silicon Valley Bank (SVB) Financial, as this puts minority shareholders at a disadvantage.